The Bad Economic News That Used to Be Good Is Just Bad Right Now
- Cantor says Fed seen unwilling to deviate on normalization
- Investors likely haven’t priced in deterioration of earnings
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Why is bad news still bad news for battered equities? The Fed put for financial markets and the China put for the global economy have disappeared simultaneously.
In prior periods of stress, bad economic data could often be framed as positive for risk assets: It increased the odds of support from one of the world’s two largest economies. Either the Federal Reserve would cool its jets on normalizing policy or even add stimulus, or Chinese policymakers would step in with measures to bolster demand.